Why was my credit card application declined?
It can be incredibly frustrating to have your application for a credit card declined.
1. You have access to too much credit
However good your credit score, there will come a point when lenders get wary about the amount of credit you have at your disposal.
You may not have used your overdraft facility or maxed-out your credit cards but, as far as the lender is concerned, you could if you wanted to and that might leave you with too much debt to handle.
So a prudent course of action could be to terminate the agreements with credit cards you no longer plan to use before applying for another. This has the bonus effect of protecting yourself from potential fraud.
It's also worth noting that lenders will often fail to accept you for a card if you already have one of their credit cards. A number of cards are issued by one provider under different brands - for example, the Virgin Credit Card is issued by MBNA - this can lead to some unexpected rejections or credit limits set which are lower than you had envisaged.
2. You don't appear on the electoral roll
Not being listed on the electoral roll can have serious implications on how a lender judges your creditworthiness. Lenders check this register of voters to counteract fraud.
If you've moved house recently, ensure you are registered on the electoral at your new address.
There is no requirement to vote if you'd prefer not, just add yourself to the electoral roll before applying for credit. Registration is easy, visit www.aboutmyvote.co.uk for full details.
3. You've applied for numerous cards
People often make the mistake of applying for more than one card in a short space of time. Lenders are often concerned by a pattern of multiple applications as it can give the impression you are trying to acquire access to more credit than you can possibly afford to repay.
If you fall under this category, it may be wise to stop applying now and leave it for a period of six months or more before you make another application.
4. There are errors on your credit file
It is quite possible for there to be errors or omissions on your credit file that can give a misleading picture of how creditworthy you really are.
It's good practice to regularly check you credit file so that you can make sure all the information is correct and up-to-date.
5. You've been a victim of identity fraud
If you believe your credit file should present you in a positive fashion but you are rejected for a credit card, it isn't impossible that you've fallen victim to identity theft and someone else has been borrowing in your name.
Again, a check of your credit file should clear this up. By subscribing to a credit monitoring service for just a few pounds a month, you can receive alerts when changes to your file occur, making it easier to watch for fraud.
6. Lenders are increasingly fussy
It's possible that in the past you were able to shift your debt from one intro rate deal to another. However, since the credit crunch lenders have become far more cautious. Previously they may have welcomed you, but today it may be that your earnings or credit history don’t meet the requirements for the deal you're applying for.
7. You don't fit the lender's profile
Each lender will have a vision of their ideal customer meaning one lender may look upon your application positively while another may make a less favourable assessment. Just because one credit card company is willing to give you a credit card, it doesn't mean that others will follow suit.
8. Previous credit problems are still showing
If you've been a good borrower for the past few years, it can be irritating to have an application for a credit card rejected because of a CCJ (a County Court Judgement) issued against you from a while back. Unfortunately these will continue to appear on your credit file for six years.
There isn't much you can do about that apart from manage all new borrowing sensibly and prove you're creditworthiness. However, it is worth checking that any CCJs are marked as 'satisfied' on your credit file.
If you have cleared a CCJ and it isn't showing as settled on your credit file, request a letter of satisfaction from the issuing county court and send it to the credit reference agencies so that they can correct your file.
9. You are new to borrowing
Never using credit before can be a hindrance to getting credit for the first time. Lenders like to see that you have a history of managing debt well as this gives them confidence you'll repay what you borrow on time.
A credit builder credit card can be a good way to build up a credit history. These tend to be more expensive in terms of interest charges than mainstream ones. Nevertheless, if you make regular repayments over a number of months this will help strengthen your credit history and in due course you'll be able to get more favourable terms.
10. You've started a new job or recently moved home
If you've recently moved home or started a new job you may find it more difficult to qualify for the best deals for a short while.
Lenders like to have the confidence you have the ability, stability and willingness to repay your borrowing - and changing jobs suggests you are in a less stable position than before. Wait a few months until any probationary period expires before applying for a new card. Similarly moving home can cause a temporary dip in your credit rating, so wait a few months before applying for credit.